In the near future, finance companies may need to undertake significant operational restructuring, reevaluate their growth strategies, and identify their primary customer segments. Simultaneously, they should think of measures to enhance their risk assessment and control processes after disbursing funds. No longer the goose that laid the golden eggs From a peak of over VND4 trillion in 2017-2019, the profit before tax of FE Credit totaled more than VND3.7 trillion in 2020 despite all those economic woes during the Covid-19 pandemic. Following the transfer of a 49% stake to SMBC Consumer Finance Co. Ltd. (SMBCCF), its pre-tax profit in 2021 shrank to only VND611 billion. The nightmare continued in 2022, when this company made a loss of some VND3.12 trillion as its bad debt ratio further increased to 21.8% from 14.1% in late 2021. In the first half of 2023, FE Credit reported a loss of nearly VND3 trillion, equivalent to the sum lost in the second half of last year. Thus, in the past four quarters, FE Credit incurred a total loss of about VND6 trillion, entirely because of its soaring bad debt. As a result, its equity dropped more than 35%, from over VND15.9 trillion in the end […]
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